Markets

Modern fraud prevention measures stifle cryptocurrency market growth

Published

7 months ago

4 July, 2024

Modern fraud prevention measures stifle cryptocurrency market growth

Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of the crypto.news editorial team.

The number of cryptocurrency users in the global market has reached approximately 425 million or about 8% of the world’s connected population (est. 5.44bn). This number, while impressive, falls far short of the optimistic adoption estimates that investors were touting just a few years ago. Crypto.com, for example, foreseen a market with over a billion users in 2022.

A slow-growing user base has hurt the value of cryptocurrencies. Reduced liquidity in smaller markets makes it harder for traders to execute large orders without impacting prices, which in turn tends to generate more volatility and makes investing in crypto a risky proposition for the masses.

Markets function efficiently when they are full, as they create a more realistic market price. This also drives diversification opportunities, improves price discovery, and supports a wider selection of crypto tokens.

A number of reasons keep investors away from cryptocurrency opportunities, including a lack of understanding of blockchain, security considerations, and regulation. However, one overlooked factor preventing wider adoption is the unnecessary KYC protocols put in place to prevent fraud.

The process for a new user to sign up to an exchange should be simple, quick, and easy. You would expect to be able to purchase cryptocurrency within seconds using a credit card. This process, however, rarely works for new customers due to concerns about fraud.

New users are systematically subjected to lengthy and complex KYC processes, which include email and phone verifications, captcha solving, photo ID verification, and facial video capture.

Credit card transactions are not always allowed, and ACH transfers are limited to small amounts. Transactions are then often routed through 3DS, where they are unnecessarily rejected by issuers or exchanges that use inefficient rules to protect against chargebacks and costly penalties.

Know your customer (KYC) is an interesting example of an often unnecessary rule. Exchanges are required by law to comply with KYC regulations. However, many go above and beyond the law’s requirements, hoping that more KYC will protect them from fraud. For example, in the United States, KYC has a threshold of $3,000 before it becomes mandatory. Any cryptocurrency purchase below that threshold does not require KYC. However, all cryptocurrency exchanges put new customers through their KYC protocols for purchases as low as $100.

The sad reality is that not only do around 80% of frauds come from KYC-verified accounts, but they also represent an additional barrier to entry for new investors. Fraudsters have learned how to bypass KYC requirements by purchasing KYC-verified accounts for as little as $50 on the dark web.

KYC is an invaluable tool to help governments control money laundering, but it only creates the illusion of protecting exchanges from fraud. In reality, it enables more fraudulent transactions while adding friction upstream that often discourages new users from investing in cryptocurrencies. The end result is lost business, high fraudulent chargebacks, and artificial barriers to the adoption of cryptocurrencies by a wider population.

In a typical scenario, Jennifer L., a 27-year-old account executive, read an article about Ethereum and wanted to test the cryptocurrency waters. She went to Coinbase to purchase $20 worth of the coin. However, after adding her payment details, she was asked to upload a photo of the front and back of her driver’s license or passport. After submitting that, she was asked to upload a photo of herself holding her photo ID. Jennifer decided that $20 worth of cryptocurrency wasn’t worth the effort, abandoned the purchase, and is unlikely to try again any time soon. Cryptocurrency exchanges see these types of abandoned carts all day, every day.

Unfortunately, most payment systems automatically reject questionable customers. This hits new users the hardest, as they haven’t built a trustworthy reputation within the payment system.

Every industry has an ecosystem of businesses and vendors that rise and fall based on their performance, and the cryptocurrency market is no exception. Fewer investors means a smaller market for publishers, advertisers, investment advisors, and blockchain developers. There are also fewer opportunities to create new coins or technologies, develop marketing plans, and analyze the market.

Cryptocurrency could grow its market size, support a significantly larger ecosystem, and experience a golden age of innovation if it can find a way to streamline onboarding for millions of users who are being rejected due to fraud concerns. Reducing the need for KYC beyond regulatory requirements, moving away from rules-based credit approval systems, and leveraging behavior-based AI screening solutions would certainly help.

AI is capable of making accurate transaction approval decisions in a fraction of a second, making highly effective decisions in under 300ms, fast enough to track cryptocurrency purchases. It approves more first-time users while detecting and rejecting fraudulent users. When cryptocurrency exchanges move towards AI fraud detection, we will see the entire market reach its potential.

Alex Zeltcer

Alex Zeltcer Alex is at the helm of nSure.ai, leading the fight against chargebacks and protecting high-risk transactions from fraudsters. With over 20 years of diverse experience in IT, R&D, and sales, and as an active angel investor, he has been an advocate and pioneer in digital technology. Alex’s leadership has consistently driven scale, structure, and efficiency across multiple industries. Prior to nSure.ai, he led growth and innovation in digital gift cards, online grocery shopping, and 3D collaboration. As the former VP of R&D at Comverse, he managed a team of 250 engineers. His achievements are marked by his passion for technology, whether leading a spinoff to ship 200,000 orders, deploying large projects to tens of millions of subscribers, or significantly increasing revenue. Alex is a frequent speaker at conferences and forums and is a member of the Young Presidents’ Organization (YPO). Living in Tel Aviv, he enjoys personal activities such as cycling, cooking, enjoying a good glass of wine and spending quality time with his family.

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Markets

Crypto Markets Rebound as Spot Bitcoin ETFs Attract Massive Inflows

Published

6 months ago

17 July, 2024

FinCrypt Staff

Crypto Markets Rebound Ahead of Early Ethereum ETF Approval

This week saw $722 million worth of Bitcoin spot ETF inflows, including the largest daily inflow in a month.

Cryptocurrency markets rallied on Wednesday, driven by inflows into spot Bitcoin exchange-traded funds (ETFs).

The price of Bitcoin (BTC) is up 3% over the past 24 hours to last change hands at $65,200, according to CoinGecko. Ethereum (ETH) is up 2% and is trading at $3,471. Solana (SUN) and Polkadot (POINT) increased by 4%.

Bitcoin spot ETFs saw $422 million in daily inflows on Tuesday, the highest in the past 30 days, according to Far side data, . The all-time record for a single day was $1.05 billion on March 12.

Among Tuesday’s top contributors, BlackRock’s IBIT led with $260 million in inflows, followed by Fidelity’s FBTC with $61 million. This week has already seen more than $722 million in inflows.

Among the top 100 cryptocurrencies by market cap, Worldcoin (WLD) led with a 28% increase, followed by Helium (HNT) with 20% and Lido DAO (LDO) with 15%.

Worldcoin, a decentralized identity project led by OpenAI CEO Sam Altman, announced is extending the lockups for early investors and team members. This means that tokens will be gradually released through 2029, instead of the original 2027 plan. Token unlocks are generally seen as a negative because they increase supply and early investors can sell their tokens for profit.

Meanwhile, XRP, the token of the XRP Ledger network, jumped 8% after the CME and CF benchmarks introduced new indices and reference rates for XRP.

U.S. stocks faced a downturn on Wednesday. The S&P 500 fell 1%, while the Nasdaq Composite and Dow Jones Industrial Average both fell 2%.

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Markets

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Published

6 months ago

17 July, 2024

FinCrypt Staff

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Crypto markets appear to have been taken over by the bulls as major tokens have surged above their crucial resistance zone. Bitcoin surged above $65,000 while Ethereum was above $3,500, and XRP, which had remained passive for quite some time, surged over 40% in the past few days to hit $0.6. The uptrend has been captured in most altcoins, with Worldcoin (WLD), Arweave (AR), and Injective (INJ) leading the rally. Here’s what to expect for these tokens in the coming days.

Worldcoin (WLD) Price Analysis

O Worldcoin Price has been trading inside a descending wedge since it marked a new ATH near $12 in the final days of Q1 2024. The recent price action helped the price break out of the upper resistance of the wedge, breaking above the crucial resistance zone between $2.21 and $2.39. Market sentiments have changed, but technicals suggest that the bulls may remain passive for a while, which could offer some room for a bearish pullback.

The price broke out of the wedge with a significant increase in volume, but the current volume suggests that the bulls have taken a step back. Meanwhile, the RSI is about to reach the upper boundary, which could attract bearish forces. Additionally, the DMI has undergone a bullish crossover, but the decline in the ADX suggests that the rally may remain consolidated above the gains. Therefore, the WLD price is expected to maintain a horizontal consolidation between $3 and $3.3 and trigger a fresh rally to $4.4 during the next bullish rally.

Arweave (AR) Price Analysis

Arweave formed a strong base around $25, which helped the rally trigger a recovery during the bearish attack. Mt. Gox and German terror forced the price to fall below $20. However, the recent price action has brought the altcoin within the bullish range and raised expectations of maintaining a decent uptrend for a few more days.

AR price has hit one of the major resistances around $30 to $31.5, which could act as a strong base once overcome. The buying volume is slowly increasing, which could keep the bullish hopes for the rally high. Moreover, the supertrend has just flashed a buy signal, indicating a clean reversal of the trend. Therefore, AR price seems primed to maintain a healthy uptrend and rally above $40. However, if the bulls maintain a similar trend, making new highs above $50 may not be a tedious task for the bulls.

Price Analysis of Injective (INJ)

Injective price has been showing sharp strength since the beginning of the year and hence, the recent turnaround is expected to revive a good uptrend going forward. The bears engulfed the rally to a large extent, but the recent price action suggests that the bulls have regained their dominance. Therefore, INJ price is expected to maintain a strong uptrend with a bearish interference on the way down.

INJ price has surged above the lower support zone and has registered consecutive bullish candles. Although the volume is below the required levels, the OBV is maintaining a sharp uptrend. Furthermore, the Ichimoku cloud lead span B is heading towards the lead span A and a healthy crossover indicates the start of a new uptrend. However, INJ price may be out of the bears’ reach once it secures the resistance zone between $30.77 and $32.12, which seems to be on the horizon.

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Markets

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Published

6 months ago

17 July, 2024

FinCrypt Staff

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Ethereum (ETH) supply on exchanges has hit a 34-month high as the asset’s price surpassed the $3,500 mark.

ETH has risen 2.3% over the past 24 hours and is trading at $3,490 at the time of writing. The second-largest cryptocurrency — with a market cap of $419 billion — briefly touched an intraday high of $3,517 earlier today.

ETH Price, Whale Activity, RSI, and Exchange Supply – July 17 | Source: Santiment

Ethereum’s daily trading volume also increased by 7.6% to reach $19.8 billion.

According to data provided by Santiment, the supply of Ethereum on exchanges has reached $19.52 million ETH. This level was last seen in September 2021, when the asset was trading around the same price.

On the other hand, data from the market intelligence platform shows that the number of whale transactions has fallen by 12% in the last day — falling from 8,730 to 7,629 unique transactions per day.

The move shows that the supply of Ethereum on exchanges has been increasing with small deposits rather than large transactions from whales.

Additionally, the ETH Relative Strength Index (RSI) is currently hovering at the 60-mark, per Santiment. The indicator shows that Ethereum is slightly overbought at this price point, but it may not be in a critical position due to its large market cap.

One of the main drivers of Ethereum price increase is ETH spot expectations ETFs in the US Investment products are scheduled to start trading on July 23rd.

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Markets

Bits + Beeps: How to Play the ‘Trump Trade’ in Cryptocurrencies After the Assassination Attempt

Published

6 months ago

17 July, 2024

FinCrypt Staff

Bits + Bips: How to Play the ‘Trump Trade’ in Crypto After the Assassination Attempt

Also, how much will the Fed cut rates (and when)? What will be the inflows into ETH ETFs? And what is the near future for Bitcoin?

Posted on July 17, 2024 at 12:00 PM EST.

Listen to the episode at Apple Podcasts, Spotify, Capsules, Source, Podcast Addict, Pocket molds, Amazon Musicor on your favorite podcast platform.

In this episode of Bits + Bips, hosts James Seyffart, Alex Kruger and Joe McCann, joined by guest Jack Platts, dive into the market reaction to the recent assassination attempt on former President Donald Trump, analyzing how this event will influence the 2024 US presidential election and the cryptocurrency markets.

They also cover potential rate cuts: Could there be a cut in July? How big could the September rate cut be? Could the decision be influenced by the upcoming election?

They also give their predictions on what percentage of BTC ETF inflows the ETH ETFs will reach, and James talks about what he expects for Grayscale’s ETHE (hint: his outlook would be positive for ETH).

Finally, they delve into what’s next for Bitcoin as the German government runs out of BTC and Mt. Gox distributions begin. Just now?

Program Highlights:

Whether Trump’s shooting decided the election and whether the event caused a “flight to safety”
How election markets are becoming a place to watch election probabilities and whether cryptocurrencies “lean right”
Whether rate cuts will occur in July or September and by how much they will cut: 25 bps or 50 bps
How Joe sees the relationship between global liquidity cycles, rate cuts, and the potential rise of Bitcoin
What are the new updates about Ethereum ETFs and their expected launch?
Why Solana Hasn’t Performed Significantly Better Since Trump News
What Market Breadth Indicates About the Current Market Rally and the Impact of Rates on Small Caps
Everyone’s predictions on ETH ETF inflows and how much outflow we’ll see on Grayscale’s ETHE
What’s Next for BTC After German Government Exits Bitcoin and Mt. Gox Giveaways Starting This Week